NFT Checkout - Behind The Scenes

Introduction

In March 2021. Jack Dorsey, ex-CEO of Twitter posted his first ever tweet “just setting up my twttr”, which was later sold as an NFT for 2.9$ Million. It was perhaps not imagined by anyone that a 24-character tweet would be worth 3$ Million. An NFT is a unique digital asset, it could represent any digital item from digital art to music to a tweet. Ever since the beginning of the blockchain era, the decentralised world has not only opened newer channels of making money but has found a way to certify the correct ownership and authenticity of any kind of digital artwork. In this blog, we deep dive into what NFTs are and how an NFT checkout works behind your purchase screen.

What are NFTs: Fungible & Non Fungible Tokens

To understand NFT we will have to walk through what tokens are, and how many types of tokens exist and serve what functionality. To begin with, tokens are digital representations of value, ownership, or access rights and are built over a blockchain or a ledger system. They use smart contracts and run on the blockchain of another currency. They have varied functionalities ranging from storing value, trading, gaining access to services etc..?

Fungible tokens are digital assets that are unique and interchangeable with one another, for example, Bitcoin, Ethereum etc. They are divisible and have identical properties and values.

On the contrary, NFTs or Non-Fungible Tokens are unique digital assets that represent the ownership of distinct digital items. Every NFT has its own unique value and properties and they are not divisible.

Let’s dive into the beginning of NFTs a little, around 2012 the concept of coloured coins emerged. Coloured coins were bitcoins with a mark on them that specified their functionality. They were the first step to realising what is now known as NFTs. This was followed by the introduction of the counterparty platform which took it a notch up by allowing the users to create custom tokens and assets on top of the bitcoin blockchain.

The main turning point was the launch of Ethereum in 2015. Ethereum allows the creation of smart contracts. In 2017 ERC-721 standard was introduced in the Ethereum platform which provided a framework for creating unique tokens. This is the standard for non-fungible tokens today, and it set the stage for the expansion of NFT projects from 2017.

This was followed by a significant boom in NFT projects, large NFT marketplaces like Cryptokitties, Opensea etc started to take shape. NFTs have made their way into many domains such as gaming, digital art, music, collectables etc and have created newer possibilities for artists and creators to monetise and trade their work and art.

The NFT Checkout Concept

How does a typical NFT purchase happen? To buy an NFT the following are the steps that a user has to go through; ?

• The first step would be to set up a wallet such as MetaMask or Trust Wallet and fund it with cryptocurrency, typically Ethereum
• We can fund these wallets with cryptocurrencies over various exchanges like Coinbase or Binance.?
• After this the wallet has to be connected to an NFT marketplace like OpenSea or Rarible.?
• After we have finalised which NFT to purchase we either place a bid or click "Buy Now," and confirm the transaction.?
• We have to ensure that we have the gas fee in the native token required to make the transaction; if we don’t then we have to get the native token in our wallets
• Once the transaction is confirmed the ownership of the NFT is passed on to the buyer.

This process could be cumbersome especially for beginners in the web3 and crypto space, and time-consuming in comparison to a traditional finance transaction. Payment services providers in the crypto space such as Nivapay have built NFT Checkout as the solution to optimise a typical NFT transaction and make it more convenient and user-friendly. An NFT Checkout product simplifies this entire process into a one-click transaction akin to a traditional finance transaction. We have listed below the technical breakdown of the entire process behind the scenes of an NFT Checkout transaction;

• User selects an NFT from the marketplace
• User pays for the NFT to the Payment Gateway in Fiat currency
• The Payment Gateway on the NFT Marketplace’s website converts the Fiat currency into crypto currency
• The Payment Gateway deposits the converted cryptocurrency into the Merchant’s wallet
• The NFT Marketplace transfers the ownership of the NFT to the buyer
• After the transaction is successful user receives the NFT in their wallet

Hence compressing a 5 step process into a single-click transaction. Benefits for Business NFTs have become a significant component of various industries, primarily for the Online Gaming and Digital Art industries. Having an NFT Checkout can optimise the entire user experience around purchasing NFTs and hence help manifold the revenue. Some benefits of integrating an NFT Checkout product on your business’s website are listed below

• UI/UX optimisation: An NFT Checkout product makes a typical NFT purchase process simpler, convenient and significantly less time-consuming for both web3 native users and beginners.?
• Decline in drop-offs: The higher the time spent by a user in the checkout funnel higher the chances of drop-offs. By optimising the entire checkout process to a single click transaction, an NFT Checkout product minimises the drop-offs of end users.?
• Customer acquisition: By simplifying the checkout process for a typical NFT purchase an NFT Checkout product makes it easier for beginner NFT enthusiasts to purchase NFTs, hence increasing customer acquisition of the merchants.?

Summing it up (Future of NFT Checkout and Conclusion)In a world where a 24-character tweet can be worth millions, NFTs have rewritten the rules of the digital realm. These unique tokens, representing ownership of digital assets, have transformed industries, from art to gaming. NFT checkout products streamline the purchase process, simplifying it to a single click, and making it accessible even to newcomers. The future is definitely awaiting for significant increase in the use cases and popularity of NFTs. NFT Checkout is imperative to optimising revenue and customer acquisition for NFT merchants. Join us in exploring innovative solutions, pushing boundaries, and shaping a future where the obstacles of today become the stepping stones to progress. Stay tuned! :)